Business Choices

• What is opportunity cost?

  The loss of the next best alternative
• When does opportunity cost occur?

  When a choice is made
• How does paying salaries represent opportunity cost in production?

  It loses the chance to speed up production
• What is a trade-off in decision-making?

  A balance or compromise on two decisions
• What are two decisions involved in a trade-off regarding profits?

  • Reinvesting profits to expand
  • Giving higher dividends to shareholders